Cisco Paints a Mixed Picture

Cisco Systems reported quarterly earnings and sales late Wednesday that were largely in line with forecasts, but the company's forward guidance was below Wall Street estimates.

Cisco's pro forma earnings of 25 cents a share were a penny ahead of estimates, after backing out a four-cent charge as the company expensed options for the first time. Sales rose 9.7% to $6.55, just below $6.58 billion forecasts.

"Q1 was a solid quarter for Cisco, with balanced execution across most of our geographies, market segments and product categories," Cisco CEO John Chambers said in a statement. "We are especially pleased with the improving business momentum in the U.S. and Asia Pacific, the strength of our product families and the accelerated growth of the commercial marketplace, which has become our fastest growing customer segment."

Chambers also said the company is seeing "an increased trend toward customers choosing integrated networking solutions that combine our core products with advanced technologies" such as security, enterprise IP communications and wireless.

On the conference call, Chambers said fast growth in India could make that country a bigger market for Cisco than China in a few years.

Looking ahead, Chambers said fiscal second-quarter sales will be up 8-9%, below the 11.1% growth that analysts were looking for. He said Japan will likely remain a difficult market, and Europe, normally strong in the quarter, is "tough to predict."

Cisco shares fell 2% in after-hours trading.

Stocks posted modest gains during the day, but terrorist attacks in Jordan and a credit downgrade at GM limited gains.

The Nasdaq rose 3 to 2175, the S&P 500 added 2 to 1220, and the Dow climbed 6 to 10,546. Volume rose to 2.19 billion shares on the NYSE, but declined to 1.64 billion on the Nasdaq. Advancers led 17-14 on the NYSE, and 16-13 on the Nasdaq. Upside volume was 61% on the NYSE, and 56% on the Nasdaq. New highs-new lows were 101-135 on the NYSE, and 106-64 on the Nasdaq.

Dell slipped fractionally ahead of its earnings report due out after the close on Thursday.

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